Reminder to employers sponsoring H-1B workers about payment of fees
April 05, 2011
As H-1B filing season is now upon us, we are reminding employers of one of the commonly misunderstood obligations of the H-1B program. A recent announcement from the U.S. Department of Labor (“USDOL”) helps drive this point home.
The USDOL recently announced that it ordered a Maryland school district (“District”) to pay over $4.2 million in back wages to 1,044 foreign teachers hired under the H-1B program. The USDOL has taken the position that the District effectively reduced the wages of these teachers by requiring them to pay $4,224,146 in fees associated with preparation and filing of the H-1B petition. The USDOL also assessed $1.7 million in civil money penalties based on the willful nature of the violations. Not surprisingly, the District has announced that it is challenging the USDOL assessment, but the case is a clear illustration that the USDOL is enforcing its regulations on this issue and is taking the matter seriously.
Under the H-1B program, USDOL regulations require that employers pay the “required wage,” which is the higher of the actual or prevailing wage for the position in the areas of intended employment. Forcing H-1B employees to pay fees associated with the preparation and filing of the H-1B paperwork effectively reduces the wages of those employees below the required wage. As noted in the USDOL announcement:
| The H-1B visa program requires that employers pay certain fees incurred when they utilize the program. Instead of paying these fees, PGCPS required the foreign teachers to pay them. As a result, the teachers' earnings were reduced below the amount legally required to be paid. |
In practice, employers using the H-1B program are required to pay the fees associated with the preparation and filing of the petition, including any legal fees associated with that work. USDOL regulations state the following with regard to deductions of H-1B expenses from an employee’s wage:
| (ii) Deduction which is authorized by a collective bargaining agreement, or is reasonable and customary in the occupation and/or area of employment (e.g., union dues; contribution to premium for health insurance policy covering all employees; savings or retirement fund contribution for plan(s) in compliance with the Employee Retirement Income Security Act, 29 U.S.C. 1001, et seq.), except that the deduction may not recoup a business expense(s) of the employer (including attorney fees and other costs connected to the performance of H–1B program functions which are required to be performed by the employer, e.g., preparation and filing of LCA and H–1B petition); the deduction must have been revealed to the worker prior to the commencement of employment and, if the deduction was a condition of employment, had been clearly identified as such; and the deduction must be made against wages of U.S. workers as well as H–1B nonimmigrants (where there are U.S. workers); or | |
| (C) Is not a recoupment of the employer's business expense (e.g., tools and equipment; transportation costs where such transportation is an incident of, and necessary to, the employment; living expenses when the employee is traveling on the employer's business; attorney fees and other costs connected to the performance of H–1B program functions which are required to be performed by the employer (e.g., preparation and filing of LCA and H–1B petition)). (For purposes of this section, initial transportation from, and end-of-employment travel, to the worker's home country shall not be considered a business expense.); | |
| (11) Any unauthorized deduction taken from wages is considered by the Department to be non-payment of that amount of wages, and in the event of an investigation, will result in back wage assessment (plus civil money penalties and/or disqualification from H–1B and other immigration programs, if willful). | |
| (12) Where the employer depresses the employee's wages below the required wage by imposing on the employee any of the employer's business expenses(s), the Department will consider the amount to be an unauthorized deduction from wages even if the matter is not shown in the employer's payroll records as a deduction. |
An H-1B employer may also not recoup the training fee, which is either $750 or $1,500 depending on the size of the employer. The H-1B employee may pay for the premium processing fee if he or she chooses.
Employers sponsoring H-1B workers should familiarize themselves with their obligations under the H-1B program, as there are numerous other requirements. For example, there are restrictions relating to penalties for early termination of employment. Oftentimes, employers will want to be able to recoup their investment in the H-1B process if the H-1B worker decides to leave employment earlier than anticipated. Such arrangements must be carefully structured so they are not characterized as a penalty under USDOL regulations.
Please contact Matt Raynes at our Bangor, Maine office with questions.
This alert is provided as general information, and is not a substitute for legal or other professional advice.
